CAG raps govt over ‘undue benefits’ to Reliance, Essar

“Undue benefit was extended to RPL by non-recovery of full wharfage rate".

CAG reports were tabled on the last day of Budget Session in the Assembly on Friday. (Source: IE/file)

The country’s audit watchdog, the CAG, has rapped the state government for “extending undue benefits” to private companies like Reliance Petroleum Limited and Essar Power, and for going soft on others like ABG Shipyard Ltd that have operations in the port and power sectors in the state.

“Due to non-fixation of time limit in the Port Policy and BOOT Principles and due to deficient planning, the important commitments made in the policies were not implemented even after a lapse of more than 15 years since the declaration of the policies,” stated CAG, while coming down heavily on the state government’s port policies in the “Economic Sector” report, that was one of the five CAG reports tabled on Friday, the last day of the ongoing session in the Assembly.

“Though the port policy envisaged private jetties as an interim arrangement until new ports become operational, it was observed that 16 agreements for private jetties were entered for a period ranging from 5 to 25 years, between May 1995 and April 2011.

It was noticed that as against the 10 ports to be developed with joint/private sector under the Port Policy, three ports, Dahej, Mundra and Hazira, were developed till March 2013, the report added, stating that the state’s port policy “did not envisage any time limit for development for private ports”.

“Undue benefit was extended to RPL by non-recovery of full wharfage rate after the cost of captive jetty (Rs 362 crore) constructed by it, was set-off. Further, erroneous calculation of set-off value and application or incorrect wharfage rate resulted in short recovery of Rs 649 crore from RPL,” stated CAG, pulling up the state-run Gujarat Maritime Board (GMB). The agency also pulled up GMB for going soft on companies like ABG Shipyard Ltd that was handed over 2.68 lakh sqm land in Bharuch district for a ship building yard. “Lease rent to the tune of Rs 2.10 crore remained outstanding (June 2013) and was not paid in spite of reminders by GMB to ABG. However, GMB did not take any action to suspend operation of ship-building facility of ABG,” the report added.

CAG also pointed out that GMB also failed to invoke contract provisions against defaulting contractors. GMB had entered into a deal with both companies to buy a tug for Rs 1.59 crore, and a hovercraft for Rs 6.30 crore respectively. “The inaction led to blocking of funds and potential revenue loss,” the audit stated.

Meanwhile, in its report on Gujarat’s Public Sector Undertakings (PSUs), CAG stated that the state-run Gujarat Urja Vikas Nigam Limited passed on “undue benefits” to the tune of over Rs 587 crore to Essar Power Gujarat Limited.